NEW YORK, DECEMBER 8: The National Association of Securities Dealers (NASD) on Thursday may move forward with a plan to raise $1 billion by selling off most of its crown jewel, the Nasdaq stock market, through a historic private placement.The Nasdaq's top listed companies, such as Microsoft Corp and Cisco Systems Inc, would be offered stakes in the solely electronic stock market, as would the NASD's 5,592 members, people familiar with the plan said.NASD executives would not talk about the proposal, but it is expected to be the main topic at the NASD board meeting in New York this Thursday, the sources said.The idea behind the plan is to free the Nasdaq, the second largest US stock market, from its entangled relationship with the NASD and the NASDR, the organisation's regulatory arm. The NASD, a non-profit professional organisation with roots dating back to the early 1930s, is parent company of both the Nasdaq and the NASDR.The plan comes at a time when the US equities markets are undergoing majorchanges, primarily due to the rising popularity of upstart electronic stock trading networks, known as Electronic Communications Networks (ECNs). ECNs, sometimes no more than offices full of computers, pose a threat to the Nasdaq and the New York Stock Exchange because they undercut the established exchanges in trading speed and costs.In the first stage of the private placement, the NASD would sell up to 49 per cent of its shares, mainly to the top 100 companies listed on the Nasdaq. The NASD members would also be able to participate, but it is unclear as to how much equity the NASD would offer them in both the first and second rounds of the deal.The NASD would retain up to 51 per cent in the Nasdaq after the first stage of the plan. But it would forfeit that control in the second stage by selling more equity until it was left with about a 25 per cent stake in the market.A private placement could well be a precursor to the Nasdaq becoming a publicly traded company, but sources familiar with the plansay that is still undecided.A sizable chunk of the $1 billion generated from the NASD's sale of the Nasdaq stake would be slated to finance NASDR, so that the regulatory organisation would have a source of independent funding.
